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Shale’s Caution Means U.S. Oil Output Will Lag as Prices Jump Bloomberg) -- Shale’s newfound prudence after last year’s crash is putting producers in the unusual situation of reducing oil output just as prices surge. More focused than ever on keeping spending in check, shale drillers haven’t been boring new wells fast enough to keep up with output declines in older ones. So, next month, their combined production will edge lower by 47,000 barrels a day to about 7.46 million, according to the U.S. Energy Information Administration. That’s despite an oil price jump of more than 30% this year. The impact of the coronavirus on energy consumption was so bad last year that several heavily indebted shale producers went under after years of being bankrolled by Wall Street. Now, producers don’t seem to be in a rush to start another boom, and their backers aren’t either. That’s good news for Saudi Arabia, which has sought to bring prices up without unleashing a new supply glut. “We are still observing only about 50% of last year’s rig count activity,” EIA analyst Jozef Lieskovsky said by email. “With such a low rig count, even with the increased productivity, production declines in all regions are possible.” The number of rigs drilling for oil in the U.S. started plunging when the pandemic hit, reaching just 172 in August, down from 683 late in March 2020, according to Baker Hughes data. They are now at little more than 300. In theory, producers also have the option of fracking wells that have been drilled but left uncompleted, known as DUCs. But that wouldn’t help them conserve much capital because the process of blasting a mixture of water, chemicals and sand into the ground to unleash oil and gas from shale rock is the most expensive part of a well’s development. DUCs also require some work before they can be fracked if they’ve been lying idle for too long. Output will be slightly lower in nearly all key shale regions except for the Permian Basin of West Texas and New Mexico, which is estimated to produce a meager 11,000 barrels a day more, the EIA said in its Drilling Productivity Report.

What if? That is a very interesting question. Mr Maddoux we only need to look back to where this all started. I only bring this up due to the fact last night I watched a old movie named Rain Man,a very old movie with Cruise and Hoffman. One of the opening scenes was Wind farm disgusting to see, a pariah on the landscape...That was 1988, and yes that is how long this tech has been on the move. After 25 plus years where are we today, 4 trillion dollars spent perhaps far more, Texas faces a massive power outage,California is facing rolling Brown outs and this Green Energy Business CONSORTIUM has the public beginning to believe massive power outages are a needed way of life. The absurdity is mind numbing. One has to ask themselves where would the US be today if we had chosen to invest 4 trillion into fission or fusion tech, in a by far different place that I can assure you. The auto mfgs to have spent billions and billions attempting to create a EV that the public will accept. To date all those resources have been wasted, Toyota th re world leader in EV tech since 1992 has little intrest in the field. They know first hand it is unsustainable. Telsa is merely a fad,speed bump that would not exist if not for carbon credits, and federal tax credits. Biden once again has taken the US down the path to nowhere, a endless black hole for sums of money that would stagger the mind... Now I ask you, what fool would invest into a bridge going nowhere after 30 yrs... Odd I do not feel any better after that, yet it needs to be said. They say it is not civilized to put someone on the spot for there actions, I do believe it is time for that childish notion to fade into history.. Before this country fades into history.

J.mo thanks for this post. What makes this site excellent are the observations and inputs from such a varied group. What @ceo_energemsier said applies too, getting into a buying group helps, and in my experience, switching banks got me a much better merchant fee. These guys look pretty good to cut down the interchange fee. The reason prices seem so high at gas stations is because grocery stores operate on thin margins also, typically 1-3%. How do they get so big? Turnover. Back in 1984 we presented to Visa a device to read the chip that we were proposing to put in credit cards. We had a good proposal, they liked our tech, but they hated how small our company was (about $20 million). Way back then they were rolling through $800 billion a year, and expecting to double that volume within 2 years. Now it's well into the trillions, imagine collecting 2% of all that without lifting a finger? Notice how long it took for them to put chips in cards.

Great article that Mr. Warnick posted and equally important commentary that you added, Coffeeguyzz. As usual, you offered your commonsense, workaday knowledge to a complex problem. As prelude, I make my income from oil & gas. Years ago I sold transmission right-of-way to a large wind farm. I've regretted it since, mainly because it runs against my grain--it is one ugly son-of-a-buck. But to be the devil's advocate, let's just muse for a moment that all the wind greenies are right: the only way to save the planet is by subsidizing/incentivizing/handing out free money to the wind energy billionaires until every wind corridor in America is dotted with windmills. In the process, Wyoming, which is as the article states already producing 15X the energy it needs, becomes the "Electricity State," rather than the Cowboy State. Electric lines are stretched along the Union Pacific ROW all the way from the Laramie Gangplank to Sacramento--at the Gangplank there's room only for I-80, the railroad, and electric lines. So all throughout the wind corridor of the central portion of the United States are constructed additional power lines threading their way from the hundreds of thousands of wind turbines to all points east and west. I mean, it's a maze coming out of a destroyed landscape, an awful distortion of some once-beautiful landscape. But what if they're right? What if this horrible disfigurement of America results in so much green energy that it powers the whole country? In the process, of course, it shuts down the shale basins, the source of America's voluminous natural gas, but what if this is a good thing, forcing countries to which America exports LNG to actually erect their own wind farms? What if in the areas that are more suitable, solar farms are erected instead? Say massive solar farms along with wind farms in the Sahara, or the Negev? The world might look funny from up above but what if all those greenhouse gases plummet and California cools off and the wildfires stop and the air turns clear and all the asthma goes away and people are happy and the omni-mood skyrockets because everyone had a part in saving the planet? If you pour enough money into almost any endeavor, no matter how outrageous, it picks up enough momentum to change the world. So what if in ten years we're living in a world full of wind machines and solar farms, quadrupling the electricity we use now in the demand of EV's to be charged, the all-electric homes to be cooled and heated, and also workplaces? It's dystopian, sure, but in America, at least, we're importing what oil and gas we absolutely have to have in order to produce a few plastics and the weather hasn't changed because of all the wind farms. After all, the Sooners are dead already, the Boomers are going soon, and why don't we just assume that the greenies are right? On this forum, at least, they seem so damn confident! To me that's annoying, but to opportunists there's money blowing in from the southwest. I mean, what if? That's what Mr. Biden and Mr. Buffett and Mr. Anschutz and Mr. Musk are banking on. It's a global experiment that has been so effectively inculcated into so many receptive minds that no one but old people with a selfish interest in oil & gas doubt it. It has become the Universal Idea, the Grand Plan, the Utopia. Disenfranchised oil & gas people are signing on by the hundreds. I don't personally think it will work, but even I have to ask the question. What if?

You guys are all very, very wrong. the Spot price is no where close for one to the delivered rack price. According to RBOB vs delivered, my price quote from 4pm today was 71 cents higher than what rbob lists. (When I say delivered, that is raw fuel cost, before taxes and fees.) I have owned and operated a station for 10 years in California. Our retail margins blend in the store at 35%, so I’m not sure of the high margin anyone speaks of either. I think personally however, many owners leave money on the table in search of this unicorn they call volume. You can’t take volume to the bank, and making 180k a year in a $5m+ investment sounds foolish no? would anyone of you operate an everyday operation for a 3% cap rate? I didn’t think so. When gas is $2.50 out here, we can make more. Margins can expand, volume goes up, store sales go up, fees and operating costs go down. When fuel prices go up, well you guessed it. Margins go down, volume goes down, store sales go down. Fees and operating costs go up. But us as operators are supposed to cut margins further to appease the public. It’s a joke. you don’t think that making 5% on fuel is fair? How low would you go? What are your guys margins out there, let’s hear them. Guarantee they aren’t as low as the fat cat fueling retailers. oh ya, that 5% is before visa gets their hands on their 2%, because you know, you guys all need the credit card rewards right?

Mr. Warnick, Yes, that article on Wyoming wind is a good one for discussion, but the details that have been omitted are every bit as important - if not more so - than the info presented in that sophisticated fluff piece sympathetic to the whirleys. I refer you to the very last sentence in the article to shed light on the author's mind set. That article quite relevantly touches upon the recent Texas experience, although the differences are informative as well. The vast amount of that wind-driven electricity, Mr. Warnick, is destined for 'Green consumers' in other states, notably California. Upthread, I have made reference to 'out of market' influences that greatly bolster the Wind industry. States all around the country are mandating their utilities to purchase ever-increasing amounts of electricity from Renewable (sic) sources. That is, forcing consumers, via their government regulated utilities - to enter into PPAs (Power Purchasing Agreements) for X amount of dollars/Megawatthour, for Y amount of years. This is 100% socialistic (fascist?) practice when government backed companies are having customers funneled to them. All the while, the $23/Megawatthour Tax Credits keep pouring in. (This is precisely why Warren Buffet is the nation's biggest wind producer, as well as a large owner of Transmission lines, along with buying up local utilities. This is classic vertical integration a la J. D. Rockefeller only using the extreme naivete of the American people by which he may further enrich his bottom line). At the very least, the Cowboy State's politicians ought not to roll over and accept actions like Oakland's preventing upgrades at its port facilities so Wyoming cannot ship their coal to waiting customers in Asia. While attention is regularly put upon those ebil hydrocarbon pipelines, barely one word is published on the bitter fights farmers have been waging to prevent ùnwanted overhead power lines to cross over their land. Just tough shit for them when we gots a Planet To Save. As that sophisticated propagandist who wrote that Wired article claims, the Planet is Doomed, Doomed, I'm tellin' ya, unless we continue to hurtle backwards into Medieval conditions while our global competitors continue to build 100s of massive new coal plants ... and laugh at us all the way. Maybe we deserve to go back to a subsistence existence as we - collectively - are losing any shred of self-protecting common sense.

Biden nominee Deb Haaland confirmed as secretary of the interior https://www.foxnews.com/politics/biden-nominee-deb-haaland-confirmed-secretary-of-the-interior I am guessing that the Republicans have no more spine left!!!!!!!

Personally, I dont think the gas station owners have a high margin on fuel retail, they mostly make very high margins once the customers fet inside the gas station convenience store, that is where there margins and profits come from. Most of the gas station operators/owners have a margin of maybe 2-7cents/gal. There is also a lag for the prices to be reflected at the gas pump, from the time the gas retailer puts in the order to the time their supplies get into their USTs and the billing for their batches of fuel. The prices @ the gas station maybe going up higher and higher till they end up reflecting the increased crude prices and the refinery rack prices etc. The invasion of the country is growing everyday, most people have stopped calling them ILLEGALS and now just refer them to migrants. They are not migrants, they are illegals!!!! Just like there is no crisis, no drugs being hauled into the country by the ton and whatever else like there is/or has been no violence , looting, murders and mayhem and chaos by such groups over the summer and even now. Take down border walls and border security physically and the laws that support those border security measures, let the country be over run by illegals including gang members, cartels and cartel backed drug smugglers, but put walls and fences and NG in DC!!! Leaves American citizens unprotected, take their rights to defend themselves away yet there is no issue with building walls and putting up fences in DC. Crude and gas prices are going to keep going up, because of the geopolitical issues right now and it will only get worse, with the push for the GREED New Deal , costs of oil and gas will keep going up, federal ban on leasing and drilling , and HF.. list goes on.

https://www.bloomberg.com/news/features/2021-03-16/what-countries-will-fight-over-when-green-energy-dominates?srnd=premium&sref=RzXyyOXY "Global inequalities and rivalries will instead likely center on access to technology and finance, standard setting and control of key raw materials." 'Green' energy is one baseline for 'quality of life'. Others are affordable housing, education, and health care. It's also helpful to have reliable clean water and not being forced to spend hours stuck in traffic. Educated and productive workers, particularly those with children, are most likely to bail out of absolutist regimes that demand unqualified loyalty to the ruling elite or who promote or maintain ethnic disparities. Thus the 'fight' will be over people, in particular the educated and productive working age adults. This 'fight' will take the form of child care incentives, business location, and favorable political climate. Relatively few countries fit this description (many states in the US fail miserably on this criteria). Many of the countries that represent the 'best fit' have severe limits on immigrants. Many of these 'wars' will be in city council meetings, state legislatures, airports, border crossings, open ocean rescue, and peacekeeping by international coalitions.

In my posts, I have always stated that the margins for the fuel retailers is very slim, most dont become millionaires from selling fuel!!!

I'm stealing this 😌

I know a lot of independent gas station/convenience store owner/operators from the Mid-West, Rockies and SE, SW and USGC. Many years ago I worked with hundreds of them into forming a consortium as fuel buyers so they could get a better bargain buying fuels in larger volumes based on their local area/PADD volumes they moved. Several years after achieving that goal, I signed them up to supply them the fuels directly by getting processing contracts with various refineries in each region. It worked out beautifully for all involved. The gas station/convenience store owners/operators maybe saving $$$ by the self serve and no other overheads and the automation and therefore add to their bottom line but their actual margins on fuel products, overall remains relatively slim, they get squeezed from all sides. It is like back in the day, when flying was expensive and a rewarding experience and travelers would treat it as such, now you see people traveling in their PJ's!!!! the airlines have slimmed down to the bare bones services.

Southeast Wyoming's blizzard is over. I never lost power, nat gas, internet, DirecTv, or land line. But if you want to go anywhere, Wyoming's closed.

The RINOS never did, they just want to dump Trumpism and make personal money like the Democrats. The Democrats have plenty of spine. They even want to steal a House seat won by a Republican woman in a close contested race.

It didn't work too well. In fact, it was a disaster. That is not a working system.

I have been following the difference between wholesale gasoline prices and retail prices for many years. It is now about double what it normally is. $1.20 versus 60 cents per gallon pumped. That does not include delivery to the retailer. This is just blatant overcharging. So, we save up to a dollar per gallon at Kroger. My figures are rough, someone else probably has better ones and additional factors to consider. Gasoline stations are almost all self serve, which has changed the cost of doing business as has the convenience store approach versus the high service expected in the old days, especially in the company owned stations.

There is the question of whether the US Federal govt. actually owns any of that property in its diminished legal form as a defunct corporation. It might not have standing in court to challenge the unincorporated state taking control of the land till the federal government is reconstituted.. If the Q narrative is right, the Federal government outside of continuity of government operations of the military and FEMA, does not exist but by the momentum of belief fostered by the media and the alphabet soup agencies that they have the power they claim.

OK, after completing a little feasibility trial, the guys at Eavor claim to be installing their first (small scale) actual production facility: https://www.thinkgeoenergy.com/big-oil-waking-up-to-geothermal-invests-in-closed-loop-firm-eavor-technologies/ Frankly, looking at all of Eavor's material, it looks a lot like slideware (i.e., all powerpoint slides and little actual physical reality), but not quite: https://www.intelligentliving.co/eavor-zero-emission-geothermal-energy/ I will not be convinced until the Bavarian project actually begins providing electricity to the grid. They say they are partnering with BP and Chevron, but looking a bit deeper, we see that this is the investment arms of those companies, and it's clear that the investments were made because of the heavy government subsidies. Still, I really hope this approach ends up working profitably. The only hard number I could see is an eventual build-out to 200 MW for $2.9 billion, which is $1450/kW. We have no reason to believe this number until we actually see it done. A CCGT plant costs maybe $700/kW and wind and solar cost maybe $1000/kW, but the numbers are not comparable, because the Eavor plant has no fuel costs but is dispatchable, with availability at least as good as CCGT.

Breakthrough crude-to-chemicals refining technology developed Researchers at King Abdullah University of Science and Technology (KAUST), in partnership with Aramco, have demonstrated a technology that performs multiple upgrading steps at once, resulting in the stable conversion of crude oil to light olefins in a single-reactor system. Light olefins such as ethylene and propylene are some of the important building blocks for the plastic, construction and textile industries. Initial findings from the collaborative research on the 1-Step C2C technology have just been published in Nature Catalysis. The researchers demonstrated that the direct transformation of crude to chemicals in a one-step process is possible. KAUST and Aramco will continue to advance the development of this technology as a potentially competitive alternative to conventional refining practices. "Crude-To-Chemicals technologies may offer the potential to facilitate a paradigm shift in the way oil is utilised," said KAUST Vice President for Research Donal Bradley. "Such technologies may offer an incentive to maximise production of materials used in daily life, over the production of fuels, with very important economic and sustainability benefits.” Oil has been a major source of the world’s fuel for decades, but changing trends and the emergence of alternative energy sources means that chemicals represent one of the biggest prospects for oil in the future. Aramco is already pursuing growth opportunities in petrochemicals and the combination of new multifunctional catalysts and new reactor concepts may offer the potential to reduce cost of production. “This breakthrough catalyst and reactor innovation to convert crude oil to chemicals in a single step is the initial outcome of our long-term research collaboration with leading researchers at KAUST, where the focus has been to fundamentally reimagine crude oil conversion chemistry,” said Ahmad O. Al Khowaiter, Aramco Chief Technology Officer. “This collaborative research complements other competitive Crude-to-Chemicals technology approaches the company is pursuing to enable us to not only increase the quantity of high-value chemicals we produce, but at the same time reduce the carbon footprint associated with the use of our oil.” "Altogether, our results demonstrate that the search for alternative reactor-engineering concepts, when accompanied by complementary multifunctional catalyst development, are worth exploring for process intensification," said KAUST Professor of Chemical Engineering and Director of the KAUST Catalysis Center, Jorge Gascon. "This new process has the potential to reduce the need for distillation and steam cracking units." The research has shown that technology can modernise to meet today’s needs, while recognising that more can be done for the future. Ongoing optimisation of catalyst formulation and process demonstrates that improvement in terms of performance and application is still possible.

Good questions posed. The general assumption is that there will be no unintended consequences of a dominant green energy. I'm not sure that's a warranted assumption. I'm not well enough versed to speculate on what those unintended consequences might be, but I am old enough to know that energy doesn't come free. Right now the world has access to a fraction of the REE's that are needed for production of renewables energy-generating platforms. Like the article says, there is going to be a mad scramble to obtain those, to gain a competitive advantage. That's likely to bring on conflict. And that totally ignores the climate. There are about 12-14,000 wind turbines in the wind corridor of Texas. No matter how unpopular it might appear, one should ask the question, "Did this wind disturbance help bring down winds from the polar ice cap?" Yes, yes, I understand that the encircling warm-air jet stream winds that corral the polar winds get weaker in the winter, and that the polar winds may break through that encircling barrier. But Texas has only gotten this cold in 2011 (almost but not quite) and last month, when the density of wind energy was 10% and 20% of the total grid, respectively. What will happen when we have 500,000 wind turbines in the central part of America, the wind corridor? And what will happen when someone actually places massive solar farms in Almeria, where they grow all the vegetables for Europe in southern Spain? Does anyone actually think there's not going to be a price paid for this?

This 504 MW (nameplate) project is planned, about 8 miles south of my home. Right by an existing transmission line. There are two coal units in Craig, CO being retired, so the line will have the capacity. And the main line of the UPRR is right there, too. https://www.railtiewind.com/ Needless to say, there's a lot of local objection to the project. I would much rather have preferred to have a mailing address of Tie Siding, WY, than Laramie.

Yes I see that, good for them. Maybe they will pop up like mountain flowers who knows. I'm off to Florida,checking out the new boat all is good.

It would appear that WY does have wind turbines: Wyoming Confronts Its Wind-Powered Destiny Not as many as other parts of the States, perhaps, but they do have them. That's a good article on many of the details necessary for a good discussion.

Umm never mind 6000 feet is above the storm so to speak....lol. But then again there are no wind turbines in WY now is there..Turbines might make for great target practice however..hmm im not to sure where that came from..but it did.

My guesses are that real wages, with inflation, will be lower, unemployment will be higher, illegal immigration will be higher, backlash over gun control, election cheating, and many other issues will cause enough backlash to teach the Democrats a lesson. I don't think oil will average over $70 a barrel. Right now the gasoline stations are making a high margin of profit. Come summer, that will be cut drastically. Meanwhile Kroger is giving up to $1.00 a gallon discount to their shoppers. Or I could just be an eternal optimist.

Right, but since these wells are incredibly parabolic, just identifying monster wells that were brought on line as winter approached would be enough to do the job. In other words, once you get past the first year, the pressure head drops as the gas under pressure is either flared or captured and pipelined away. Those wells don't need to be winterized. But the new wells coming online say in November produce great amounts of gas. You wouldn't need to identify more than a few dozen monster wells for winterization--to tap for no-doubts-about-it natural gas in zero temperatures. But your idea of stored natural gas might be better. I don't know the numbers. I have only enjoyed a couple of monster wells. They were so large that, in the total design, a hundred-thousand to winterize one would be a pittance. Governor Abbott wants very much to become President Abbott, a post at which he has a good shot as he is very charismatic and well-intentioned and smart. His group will work something out (even without my help). 🙃

I assumed from your earlier post that winterizing each well would be a lot more expensive than adding storage. Each individual well would be treated as an unreliable source, but the system as a whole would be reliable without winterizing the NG to meet a once-a-decade freeze-off threat. Similarly, it may be cheaper to add additional reserve gas-fired generation instead of worrying about de-icing the wind turbines to meet the even more rare icing threat.

^ NG storage in close proximity to each utility plant would do the job. The other option would be to require exacting winterization of all wells coming online in the last three months of each year. That would ID the wells likely to produce voluminous amounts of methane during the most vulnerable months. There's plenty of gas in Texas. Making sure there gas available to the utility plants is the thing.

To throw a little cold water on the hot fires of geothermal energy, this idea was tried in Australia. they tried drilling down to these hot rocks but nothing came of the project. There are substantial geothermal power plants in New Zealand and California? but without looking in detail at the plants I suspect that in those cases the volcanic activity is quite close to the surface. Obtaining geothermal energy in sites where the heat is well below the surface is far tougher.. It may well be possible.. but at what cost..

Perhaps it is all the illegal immigrants, running air conditioners full blast while charging their Teslas?

Now you did it! We'll have to spend the next thirty posts explaining what "is" means. 🙄

Bill Clinton and his administration (read Al Gore) seemed adept at definitions. Can someone give them a call?

And Nope, wind won't work.